 Jan 2025:
Summary of DCC Analysis:
DCC, a diversified distributor specializing in healthcare, technology, and fuels (including biofuels), is shifting its focus toward sustainable energy. The company plans to sell or spin off its healthcare and technology divisions, which comprise 25% of its business, to concentrate on its energy operations.
Background:
Founded in 1994 as Development Capital Corporation, DCC has a history of exceptional growth, generating 6,500% returns from 1994–2018.
Historically a "buy-and-build" company, it has completed around 300 acquisitions, primarily in the fuel and energy sector.
Expansion into the U.S. LPG market began in 2018 but slowed due to COVID-19 disruptions.
Current Challenges:
Growth slowed after 2020 due to fewer acquisitions, affecting valuation.
Shares are trading at approximately £50, down from a peak of £80, despite the company being larger and more profitable now.
Strategic Moves:
Announced a strategic review of its healthcare and technology divisions, with plans to divest both.
Expected sale proceeds to exceed the company's current valuation multiple (8x EBITDA vs. 12–13x for these divisions).
Future Outlook:
Proceeds from divestitures likely to reduce debt and facilitate shareholder returns (e.g., buybacks).
Focus will remain on renewable energy infrastructure and biofuels, aligning with market trends.
Company aims to double energy division profits by 2030, with potential further upside from acquisitions.
Valuation and Opportunity:
Current undervaluation (8x EBITDA) limits buy-and-build efficiency, but selling divisions could highlight the energy business's potential.
Dividend yield of ~4% and projected profitability growth make DCC an attractive long-term investment.
By the early 2030s, DCC could generate over £1 billion in EBITDA, supporting a valuation of ~£14 billion at a 14x multiple.
Conclusion:
DCC's strategic pivot to focus on sustainable energy and divest non-core assets positions it well for future growth. If successful, the company could deliver substantial shareholder returns while benefiting from emerging energy market trends. |
up until recently, i had no real idea about what DCC does. and judging by the lack of posting on here for a ftse company, neither do a lot of other people.
there was an article about it in moneyweek just before the company announced its restructuring plans which brought it to my attention.
the first thing you see on last year's report is "we invest in what the world needs". it is very non-specific and didn't tell me anything. and that is part of the problem. investors need to have a better clue as to what the company does.
there was a separate sentence in the report that explained the business better : "We acquire, improve and grow diverse businesses". i know what that means! say it more loudly for heaven's sake.
so to me restructuring sounds a good thing, and perhaps coming up with different branding. it is a long time since 3 letters told you about a company, it harks back to the days of ICI.
i had no idea about the stunning long term returns. value in plain sight and i had no idea.
i see the government got rid of the chair of the CMA only this week. that sounds like a positive for this company too.
bought around £52. i'd like a share split or demergers to bring the individual share price down and make it a bit more fluid. |
RBC have reduced their price target to £58. It's like the market is not yet buying into the DCC divestment strategy. It's got to be a buy at this price with the potential for some good dividends if the re-structure plays out as planned. |
The short term flippers are gone, not for a steady run up to 65 quid |
And now £53.Are we headed back to £48? |
Pleasantly surprised to be able to buy more around the £55 mark.Sale of the century. |
This is a tectonic announcement from DCC.The conglomerate,as we know it,is to end.DCC Healthcare is to be sold and,in eighteen months,DCC Tech could go the same way,depending on results.Already circa 87% of the company,DCC Energy is the new poster boy.Expect the markets to love this.I expect £20 quid in dividends alone over the next two years and ,roughly,a doubling in share price.Yes,I'm probably being over- pessimistic.As Peter Lynch might have said,being caught with one' s pants up! |
Company breaking itself up |
Results tomorrow... This has been a big disappointment of late, come on DCC! |
Positive write-up in the Investor's Chronicle. |
Hopefully we'll get another late year surge like last year |
Very useful thanks as I was looking at starting a small position here |
Good write up! |
Hi all. I have written a blog on DCC, which I am a shareholder in, that you may find of interest. Feedback is very welcome and, needless to say, DYOR. The blog can be found here: https://tbifund.wordpress.com/2024/08/19/dcc-dcc-ln-it-delivers/ |
I think some were expecting a sale of the consumer electronics business |
As usual the company is doing fine,growing steadily each year.Markets,for about five or six years,if memory serves me correctly, has been ignoring/ underappreciating what's on offer.I'm a long term investor so it doesn't phase me. |
How is that a bad trading update? |
JP Morgan:We reinstate our rating on DCC at Overweight with a Dec-25 target price of 6,700p (17% upside). We are positive because: (1) Energy (74% of EBITA) will continue to benefit from organic growth and value-add M&A, with DCC building a leading position in European B2B solar installation (c.5% of Group EBITA) which is a fast-growing market (French/EU MW up 20% p.a.). The goal of increasing Energy profit to £830m in FY30 is achievable, in our view (JPMe c.£680m excl. future M&A). (2) Healthcare is on the cusp of a market recovery. (3) Technology profit is stabilising driven by self-help, with portfolio optimisation optionality. We forecast HSD% EPS growth in FY25-26E excl. future M&A. DCC trades on a 30%/25% discount vs. 10Y median P/E and relative P/E, respectively. |
Motoring along nicely |
Deutsche Bank £70 target price |
Another acquisition, £30mm for eenergy's energy management business. Strangely no press release. |
so over £56, what next? |
RBC target to £55. I expect this share price to continue to rise |
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